I am a senior editor at Forbes, covering legal affairs, corporate finance, macroeconomics and the occasional sailing story. I was the Southwest Bureau manager for Forbes in Houston from 1999 to 2003, when I returned home to Connecticut for a Knight fellowship at Yale Law School. Before that I worked for Bloomberg Business News in Houston and the late, great Dallas Times Herald and Houston Post. While I am a Chartered Financial Analyst and have a year of law school under my belt, most of what I know about financial journalism, I learned in Texas.

Elon Musk’s high-profile battle to sell Tesla cars directly to consumers is just the latest challenge to state laws that give an advantage to powerful local businesses, even if the legislative justification is often difficult to ascertain.

Musk told Tesla shareholders last year such laws are a “perversion of democracy,” as noted by the New York Times. He joins a growing chorus of critics who are challenging laws that protect car dealers, taxi services, funeral directors and many other industries under the guise of public safety or economic regulation. In many cases those laws represent the fruits of lobbying by powerful economic interests — how many legislators don’t have an auto dealer in their district? — and result in consumers paying higher costs or having narrower choices.

The interesting thing is for decades, challenging such laws was seen as the equivalent of tilting at windmills. Under the Supreme Court doctrine known as “rational basis,” just about any law that didn’t discriminate against a protected group like African-Americans or women was presumed to be reasonable. Judges were advised not to second-guess elected representatives on whether a law had a legitimate public purpose.

That doctrine has been crumbling lately, as groups like the Institute for Justice sue, and win, over laws that benefit specific industries at the expense of would-be competitors and consumers.

“The conventional wisdom when we opened our doors 22 years ago was this was a crazy venture,” said Robert McNamara, a senior attorney at the Arlington, Va. non-profit. “Fast-forward and we’re winning 70% of our cases.”

The IFJ won a high-profile victory last year on behalf of Benedictine monks in Louisiana, for example, who challenged that state’s law limiting casket sales to licensed funeral directors. In March 2013, the Fifth Circuit Court of Appeals in New Orleans rejected the petition of the Louisiana State Board of Embalmers and Funeral Directors to reverse a federal court ruling striking down the law making it a crime for the monks to sell caskets.

Such laws once were common around the country, as funeral directors — there’s one in practically every legislative district, like car dealers — convinced lawmakers to protect them against cut-rate competition. The problem is, such laws only protected funeral directors against competition and didn’t have the sort of health and safety justification that could overcome close scrutiny, McNamara told me.

Tesla Model S (Photo credit: cdorobek)

The Sixth Circuit, covering Kentucky, Michigan, Ohio and Tennessee also struck down casket laws. But the Tenth Circuit upheld an Oklahoma law with a shrug, saying, “while baseball may be the national pastime of the citizenry, dishing out special economic benefits to certain in-state industries remains the favored pastime of state and local governments.” (Actually more than a shrug: The court cited laws providing lower tax rates to preferred industries like riverboat gambling parlors, and limiting personal-injury lawsuits against ski resorts as examples of protectionist legislation that pass constitutional muster.)

One of the main weapons the IFJ uses to challenge these laws is the Fourteenth Amendment, which guarantees equal protection under the laws. Long thought to have been neutered by the Slaughter-House Cases, an 1872 decision upholding a Louisiana monopoly statute, it has been more recently been revived to challenge laws that discriminate in favor of specific businesses.

The Supreme Court hasn’t actually revisited the 14th Amendment in this context, he said, but IFJ and others have been using it successfully in lower courts. Perhaps the reason it rejected Louisiana’s appeal of the casket decision is because “the circuits are generally getting it right,” he said.

The IFJ has challenged laws requiring traditional African hair braiders to have cosmetology licenses — they don’t use scissors or engage in other activities taught in cosmetology school, McNamara said — an Alabama law making it a crime for non-dentists to provide teeth whitening, and minimum-fare and taxi-licensing laws that protect incumbent transportation providers.

The other weapon against protectionist laws is the so-called dormant Commerce Clause, a judicial doctrine that frowns on laws that impede the flow of goods and services across state lines. The IFJ is fighting a Virginia law, for example, that requires a state-issued “certificate of necessity” for virtually every investment in medical technology and services. Getting that certificate is the equivalent of a trial, McNamara said, where entrenched competitors serve as the witnesses.

Legislators typically justify such laws as being necessary to protect consumers against disruptions or ruinous competition that would destroy a valuable service such as healthcare. Utility monopolies were long justified on those grounds. But California and Texas both have thriving healthcare systems without the certificate of necessity laws, McNamara noted. The Fourth Circuit reinstated IFJ’s lawsuit against the Virginia statute last October.

Musk may face a tougher battle against car-franchise laws. The laws were passed to protect dealers and consumers, by preventing the sort of vertical monopoly which, in the days of the Big Three automakers in Detroit, might be seen as limiting the ability of consumers to shop for the best price on a car. They’ve since become entrenched as a way for politically powerful local dealers to gain leverage against out-of-state manufacturers. Chrysler had to resort to federal bankruptcy law to terminate the franchise agreements of hundreds of dealers who challenged the action under the laws of their states.

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Take a poll. Ask all of the roughly 25,000 Tesla owners in the U.S. if they’d rather go back to the franchise version of buying and servicing a car—and don’t hold your breath. I’ve owned a Tesla Model S for one year, and I’ve owned a variety of other luxury cars in the past. Do I mind paying the full retail price for a Tesla? Absolutely not—just as I don’t mind paying the full retail price for an Apple product. The “discount” one often gets at a car dealership is more than offset by the cost of service—a dealership’s primary profit center. Tesla has a company policy of not depending on service as a profit center. You won’t get nickel & dimed. That’s a sea change as far as the customer is concerned

The idea that car dealerships “protect” the consumer from the manufacturer is exactly the opposite of the reality. Dealerships insulate auto manufacturers from the consumer. The recent ignition switch fiasco at GM would have been resolved much more quickly had GM been answering directly to the consumer. In contrast to this, Tesla responds immediately to feedback from car owners, and they address problems before the company lawyers or the government says they have to. That’s been demonstrated more than once.

In Texas…I think it would be fun to see Musk set up company stores owned/run by Monks! “Yes indeed Brother Ignatius… I would love to take a test drive! Mind if I pin my St. Christopher medal to the dashboard while you slap the dealer plates on?”